How We Boosted Returns with a Subject-to Seller Financed Note: Power of Hypothecation Explained | Real Estate Notes Show

Episode: How We Boosted Returns with a Subject-to Seller Financed Note: Power of Hypothecation Explained Full Dave's Goals and Plans: - Running advanced 5-week note investing training starting September 5th with Nathan Turner - Took over the Diversified Mortgage Expo conference, first event in Nashville June 2023, next scheduled May 31st-June 1st in Nashville - Testing hypothecation strategy where note holders borrow money using notes as collateral without transferring note ownership - Educating note originators on exit strategies and how to sell notes for highest dollar value Nathan's Goals and Plans: - Shocked by how many seller finance and creative finance originators don't know about note buyers - Learning hypothecation strategy firsthand and finding it makes sense even when borrowing money - Planning to attend Diversified Mortgage Expo in Nashville May 31st-June 1st for networking with note investors - Working to bridge gap between note creators and note buyers through education and relationship building Key Recommendations: - Note originators should learn about note buyers and hypothecation as exit strategy to cash out of created notes - Attend advanced note investing training class to understand what note buyers need and how to structure deals for highest returns - Network at Diversified Mortgage Expo (May 31-June 1, Nashville) - attendees reported 90% value from networking - Consider hypothecation strategy: use note as collateral to borrow money instead of selling note, keeping ownership while unlocking equity - Pay off underlying liens first to simplify hypothecation transactions for lenders Topics Discussed: - Hypothecation - borrowing money using notes as collateral without transferring ownership - Gap between note creators and note buyers - lack of education about exit strategies - Wrap notes complexity and how to structure them for better saleability - Subject-to deals and seller financing strategies - Importance of networking in note investing business - Power of using borrowed capital to amplify returns on deals Guest Insights: - Joe has 20 years of real estate experience starting as landlord, evolved to note origination and wrap note creation - Didn't realize he was creating wrap notes - was calling it 'selling my position' - Unaware of terminology and existing infrastructure (note buyers, hypothecation) despite decades in creative finance space - Emphasizes importance of proper education on subject-to and wrap note legal documentation you needed money and so people get caught up in this interest rate which I completely understand but if I were to charge you 30 which we don't this deal worked for you because of what the upside and what you unlock what you can do with that money and what it's saved would I be accurate yeah the course so there's a couple of reasons why I will not care about an interest rate what do I care if it's 15 17 or even 30 percent if I'm making 75 on a deal I'm not gonna give away 15 16 20 because the deal but you use our money to go make 75 on our money [Music] hey everyone I'm Dave putz good afternoon everyone and alongside me Mr Nathan Turner how are you Nathan I'm doing well how about you good man it looks like you're not home relaxing or your desk where are you I am actually in Dallas Texas right now cooking it is so stinking hot yeah I'm here at a dental conference I'm out looking for investors oh we thought maybe you should get your teeth done Dental off Dental conference interesting well hopefully uh you become successful down there and convince these awesome people with a lot of money to do some work with you congrats man that's the plan yeah so it's been an interesting uh few months for those who are brand new to our live stream and our videos this will be recorded post on YouTube and our podcast in the last eight months you and I have done a lot of work with seller finance owner finance rap notes subject twos armalo world and I think one of the greatest things you said last our last webinar was that you're amazed how so many people who are not Originators are seller finance or creative Finance people does not know about note buyers yeah I I'm astounded and part of that I think comes from my background I started off as somebody creating notes as well um and my whole intent at that time was I started creating these notes and then my thought process immediately went to okay how do I cash out of these surely there's got to be a way like you can sell a rented property so surely you can sell a note I didn't even know it was called a note at the time but that's okay I figured there's got to be a way to cash out of these yeah and so I'm looking for note investors and so I I don't know I guess I assumed everybody was doing that but uh we've been surprised to find out how many how many of these no creators don't know that we're out there yeah and I think that it's either lack of Education lack of knowledge or just a different world right we are in a different world than mostly people out there that they just don't get what we do and we're trying to help that Community not only understand the exit strategy of selling that note that they created but also understand what's needed to sell it for the highest dollar right to make it a win-win for you as well as for us to make sense for both of us and I think that's a key element for everything to happen successfully to bridge this huge gap together um and then two things that we have coming up one is soon or the other for those people who are curious about the note investing space Nathan and I are hosts re-hosting our five-week advanced level training for note investing which include a calculator a non-performing calculator due diligence so if you're a note originator and curious what note buyers do that class is a key element um it's an advanced class so it does get rid of the basics and Nathan and I are running for five weeks um I highly encourage you guys to check that out and be part of that small group of investors one of the other ways these no Originators seller finance subject you people how else can they connect with us next May June well let me back up for the class first of all yeah it is an advanced class but uh anybody who's creating notes you qualify is Advanced if you've got a knowledge of how notes work because you've created them you definitely you're you're part of that advanced group uh so don't be intimidated by that because that's you're definitely part of that group on top of that though if you want to come and meet with Dave and I and a dozen other node investors or more many dozens several dozen uh people who are in notes people who are looking to buy notes um we've got an amazing conference the Diversified mortgage Expo I just took it over this last year ran our first one in Nashville in June this last year the next one is already being planned we're already making uh all kinds of plans for this we're scheduled to go back to the same hotel in Nashville uh next next year May 31st and June 1st uh so heads up tickets aren't even on sale yet but just heads up for that make sure you put it in your calendar so you don't want to miss it it's just it's the place to be to just network network we we did our survey at the end of conference and just you know one of the questions we asked was what's what's the most valuable thing that you took from this and like 90 of them all just said networking yeah so it is super important we've said this over and over again about this is a relationship business part of that is getting out and meeting people and talking with them want to have dinner together drinks together or whatever that's a big deal sure so yeah I encourage you highly we had some of the more advanced subject to people come to our conference or not mine Nathan's conference last year um and the names we had there I'm sure all of you guys either follow or took their trainings they joined us they're probably on the call right now uh the nick mark Monroe and you know Brian Carlson all those people out there Dan Diaz who are great leaders in that space came and said oh my God I gotta have my people come next year to us it's a great wealth of information so I would encourage you to do both get into the advanced class we're starting September 5th um take a look at that uh if you need information it's on our website or on my website jkpholdings.com slash Advanced note investing or just show us an email we'll get to you and then the DME is also there which we can connect you to so feel free to reach out Branch together connect with us and let's make some money together right so one of the things we've come across yes we have videos available of last year which are great yeah they're good quality the sound is great you're gonna be able to follow up very very well uh and get some great education that way uh it's a really inexpensive way to get kind of caught up to speed which is networking so make sure you sign up for this we are live on Facebook LinkedIn I think Instagram Twitter so right now I'm putting the Chats on to um those platforms if you missed it let us know but you can definitely check out all those information so we want to make sure that you guys all get what we're doing here right this whole Space of note investing is a huge thing for all of us but what we don't realize that it is also available for those people who may not want to sell their note what they may want to do is hold a note and we've talked about wrap notes being a little hard to sell because you have an underlying buyer a borrower that you're you have a connection with and things like that so we want to make sure that we solve that problem for those people who have originated and know that either took over existing borrowers asset subject to then sold that property to what we call a Rob buyer so it's a wrap note and they sold to them that system is great we just want to make sure that if we go ahead and bought that new we want to avoid the complexities of that purchase so one of our ways of doing that is we can buy the whole note and work out the power of attorney and stuff like that which we have webinars previously about that or we can actually give you money for a period of time and lend you the money so what we do is we instead of giving you the money you give us no you keep the note and you use the notice collateral and use our money to do whatever you want to do with it we would tell you that we would first want you to pay off that underlying lien we know it's three percent we know that frustration but we will we have other videos why it makes it simpler for us but we can work out the details if you have a situation that's specific for you given that this idea which we did a video on Note Parcels versus hypothecations a while back is what we call hypothecation which means you're borrowing money using the note as collateral the note never changes hands and we just create a brand new note right this concept's been around for a while we just never heard anyone really use it well guess what we're using it so we did put our tip toes in the water and we tested this out and what you may find out is really interesting because it became a win-win for both sides the unlocked Equity be able to save a property and we got a return that would make sense for us so let me uh switch out here Nathan anyone talk before we bring our guest of honor on now I'm really excited about this I haven't tried this yet I'm really interested interested in it uh you and I have gone over some numbers on it it makes sense even when I'm borrowing money to do this so yeah I'm I'm still learning this too so I'm I'm excited to have her guest on yeah so I'm gonna bring it in right now I realized that we uh we're gonna bring him on here now he just got introduced to us a few weeks ago um so I oh I do have to change his name real quick but Joe welcome to the programming man I appreciate you jumping on with us this Friday afternoon uh while I uh get your situation fixed out here I hope all is well with you what's new with human man not much man how y'all doing what's up I don't know about this guest of honor thing because you know I've been in this world for a good little minute but like you said I'm one of those guys that even though y'all existed and I've been doing these years wrapping those for a long time I you even have to tell me what rapnote was because that was that blew my mind as well so I was saying just networking is key to everything so we're saying I'm honored to be here with y'all that's awesome well it's it's been an awesome pleasure for us to really interact with you and talk with you um so Joe tell us your background where did you get Starwood real estate how did you get introduced to real estate in the beginning I started out like uh just like any regular home buyer was uh bought my house and then the house next door went up the sale bought it turned into a landlord and then from a landlord bought another house refinance where's wash repeat and I'm staying now I have a small portfolio then I started to get into investing but I'm uh with a property manager I've been doing this for about 20 20.

we're gonna say 20 years because I'm not gonna show Too Much gray so that's awesome that's awesome uh landlord's good I'd rather be the bank or rather service was saying landlords um are good until I found out there was a better way by just you know investing in an outside and originating the notes yeah so absolutely being being the bank is what we're all about right Banks don't own reos and properties and have that kind of um liability we're not saying it's bad we're just saying we have an awkward way of doing this right and Joe it was funny because when we first started talking I said well do you own a rap note and you said no and we said well did you use 72 yes did you sell it and you said yes this is we could call that a rap new what'd you call it for all this time you've been doing it uh selling my position okay I'm still in my position so right so it it's funny you say that because you know we all have different words for different things and it whoever you teach may just change it just a tad right so what we learned about wrap nodes and subject twos is that they're very intricacy at build that kind of platform right to know what goes into it is you have to be very educated on how to create that subject choose and what you need to make sure that's a legal document would that be accurate yeah definitely okay it's amazing right because there's mortgages Data Trust in Texas right in certain States and there's land contracts what have you mostly created when you sold your position right what are you mostly created for your security instrument when you sold that asset not until 10 I'm creating a land contract an agreement for deed um there's no underlining mortgage then you know I can create a bit of trust off that but yeah I got to get a mortgage origination person for that but me personally land contracts that's what I specialize in gotcha and this is in in Texas Joe no I'm in Virginia okay okay yeah so being in Virginia you know land contracts for those who don't know we call them kanji for Deeds sometimes they're called lease options they're a little different but same kind of concept right this idea of you selling your security and if the borrower has to pay off the entire debt before getting the deed or a mortgage you get the deed up front right kind of like a you do like a car kind of purchase where you the the title of the car is held until the whole loans paid off so tell us a little bit more about how you got introduced to subject choose how did you learn about them did you have a mentor how did you learn about them um well no naturally uh with as far as the initial learning about them it started you know back at the I mean gosh we're talking years and years ago but uh you know Rich Dad education YouTube University you know just hearing about these different things and I didn't believe it you know that you could sit there and get a property like that so I everything that I heard on the internet I went and paid an attorney to research it make sure it was legal and you know when I to my surprise found out it was I mean granted attorneys are not your friends they're not going to do it for free so I learned things at two or three hundred dollars an hour but you know after about 20 hours of Education from an attorney it pretty much I created documents just like the attorney would have created it and I learned the legal side of it before I learned the investing time of it gotcha awesome so we we have a bunch of awesome questions for you um we're gonna put you on the spot Joe's been a successful property manager and real estate investor we're gonna premise with that right he's done plenty plenty of deals however there's things that we've come across that we've learned and we all learn ongoing I'm not discreeting Joe we just finding that a lot of people who are reaching these notes don't know the legality of that because be honest with you most people expect their note to perform forever so that the default is typically not discussed it's more about forming it creating it find the borrower get them on you know paper and get a down payment as Joe's realized in the the month and a half two months we've been talking is that it's not the 100 right way of doing it right um so tell us what you did before we met how did you approve a borrower to buy one of your substitute assets prior to interacting and watching our videos well basically I I went from my landlord background with it so I would you know look at their paycheck stubs or I would look at their bank account bank account and see that they have a positive cash flow could they keep a positive cash flow um along with keeping that positive cash flow could you keep it for multiple months now after you keep the positive cash flow in your account are you able to come up with a upfront payment um I was not aware that what I was doing was skirting and getting real close to what the bank should do and I I should be acting more like a bank and having certain disclosures and stuff but after I saw them keeping cash in their account then I would put them on a 12-month trial payment period if they were able to hold that payment and not default uh payments to do on the first and if I receive it on the first after 12 months then I would have regenerate the contract for deed so that's kind of how I went into about it learning from you know different different you know mainly from y'all and then talking to other attorneys okay I needed to be a little bit more with the origination process and getting the proper disclosures out there yeah so okay it's pretty good yeah YouTube University and lawyers so we want to back up for a second uh Cindy Coleman who's a regular uh attendee asks why were you doing land contracts and not mortgages uh because I wasn't comfortable giving the deed away to anyone until you can prove that you can perform it and when you said that which one of the things you mentioned to me which is really awesome before you create this land contract what do you do with that bar in your own kind of check to make sure they're able to pay for any length of period at all yeah I took that 12 month Chopper so the 12-month rental is a good test to see hey can you make payments regularly so you're seasoning a note before you even create the note correct which is awesome I think it's I didn't know that I didn't know about the season in terms that was something else that I learned as well that's awesome so yes the legal side is what we focus on for those who don't know Nathan on background we've been buying notes for over a decade right um and we started out with a non-performing notes which was a crisis after those 607 debacle so we didn't legal side more than performing side which is just different um so when you got introduced to us we didn't use the word hypothecation what would you call yes uh most mentioned uh lease option owner finance yeah we're owner financing seller financing these notes and the security instrument you create a note which the promissory note to pay and security instrument that goes to County which either mortgage do you trust contract for deed we prefer mortgages but we can do either one when you create this idea and we offer to you to not buy this note but to give you money and you continue to own the note why was that attractive to you well mainly because you're only you know Contracting for a portion of pair of of like a five-year period a 10-year period or whatever I might note that I'm originating is a 30-year note so it's like I can borrow against it and then still collect on the other ears that I didn't you know was saying leverage my position on so it was a it was a really really like a win-win for everybody and but in addition to that the fact that we're able to do that and the D doesn't have to transfer everything it's just though everything they were leaning against is the note itself uh so that was just like a you know like a just a light bulb click on it's like wow all right this is cool gotcha a question from the audience uh from Kendrick is are you using trusts for your subject to wrap notes now yes everything is always done in a trust uh mainly because the trust the name of the trust is what the public sees but the terms of the trust it requires a court order to open it up and I would encourage you guys Joe knows a lot about trust he's had a lot of experience handling the beneficiary part and all stuff um I presume he's going to be coming out with some kind of education soon to teach those people who have been doing it who are watching um in our in the uh posted uh comment there's a way to get his information I'd reach out to him and see what kind of uh education he has regarding how to structure that trust correctly so that you don't get yourself in spot that you kind of get caught up in so that's awesome um or a mortgage when you're lending to you yeah no is the collateral is that the cfd or is that a mortgage that you're like yeah we're actually leaning against a contract for deed right now a land contract right and that we're able to get the borrower right to be the lender so it's a little bit different than I'm used to I'm out of my comfort zone right now right so we literally hypothecate against land contracts indeed yeah who knew right yeah that's cool who I'm watching I'm not a big land contract person but it really worked in this case um and we're gonna share some of the numbers in a few minutes but what did why did you want to hold this note versus sell it to me mainly because my notes for 30 years if I'm selling it then I'm totally taking my hands off of it see I put the person into the agreement I backed the person so therefore if they default or anything like that I can always step right back in and pick up where they left off so that's one of the reasons why I would rather sell a portion of time to sell the whole thing totally in addition to that me backing the per the uh the borrower that I originated note it just makes the situation stronger you got two people guaranteeing this payment versus one yeah that's awesome and when the hypothecation we're really going with the idea that if Joe defaults to us which we're now the lender he's a borrower we have that that collateral which that contract for deed as additional security but we also have his company and him personally signed in this agreement but like many 32 people they are not going to default on us right they're in most cases have a really low subject two three four percent debt and they don't want to ever let that go so they'll make sure to make our payments so they don't lose this cheap debt out there so it's really cool um so what are you unlocking when you are able to borrow money you we're talked about what you can unlock why did this deal work for you and what other ways can you see borrow against your position right your rap no what can this do what can this unlock for you it unlocks track Capital because when I originate these rap notes I'm there's equity in there there's uh there's profit monthly in there but it's it's coming over time so in the big picture when you look at everything up on whiteboard or you look at it on a spreadsheet there's tons of profit in the deal but I might only be getting a thousand dollars a month might only get 700 a month it might be 100K in it but I can't touch that on your camera so therefore if I can hypothecate which is a whole new word that I even have to look that one up wow um if I can apothecate a portion of it hey now I got Capital now I can do go out and do other deals and you know make other moves yeah you unlock Equity they were stuck because you did what you did share a little bit about what did you get what was this deal without getting too much of the leads why this deal win for you what was about that you need to get done I know some people are going to lose them here right but what did this deal do for you in your situation what were you stuck what problem did we solve for you well pretty much I had a contract obligation on another transaction that I had done a bridge uh loan against multiple properties um I wasn't um none of these properties were supposed to cash out in any time in the new future and one of the uh people that I originated the raptner with they sold it to one of their family members their family members did not understand the rap know the situation or what it is where you've got it so they defaulted to the original go-to let me go get a bank loan and pay this off so when they did that it came out of the arrangement five to seven years early and it basically created a situation where if I didn't find out a different way out there was gonna be a lot of consequences wow so then I you know brand across y'all and one of the investment groups I'm connected to yeah I was like this sounds too good to be true we're gonna talk to these guys and I'm gonna go far-fetched here you needed money and people get caught up in this interest rate which I completely understand but if I were to charge you 30 which we don't this deal worked for you because of what the upside and what you unlock what you can do with that money and what it saved would I be accurate yes a cool course so there's a couple reasons why I will not care about answers or anything now granted if we jump higher than 15 I'm looking for ways to get out of it quickly because now I'm feeling more like it's a hard money loan it's a you know High investment loan I got to be out of it six months to a year but what do I care if it's 15 17 or even 30 if I'm making 75 on a deal so that works it works right we can charge 74 and you still make one percent right obviously you're not doing that so we can literally sit there and charge because people incredible I'm not going to give away 15 16 percent 20 because the deal but you used our money to go make 75 on our money exactly all day long that works twice on Sunday right exactly it's just amazing that we I'm glad we can get talked about um what is more important to you getting the most money or the lowest payment on a five-year or ten year deal granted let you guys all know we're doing these on either five or ten year we don't go too much farther but on a five-year deal what is more important to you most of the time the most cash out or the lowest payment because if we do the max cash it may be above your current p i that you're receiving from your your position rap no borrower exactly so in the five-year Mark uh the most cash is what I'm looking for because I'm gonna take the the cash I'm unlocking and go out and do two three more deals and therefore I'm gonna absorb the high interest rate for the the the five-year part now once we go out to ten years and even if we were to get into channel 15 now I'm looking for more of a payment because now I'm structuring the deal around long term where we're both making profit yeah down the road so it all depends on the time the term yeah yeah so one of the things too you didn't realize before we did this deal and one last stress is Servicing you know okay you create a note you record the note which is one thing we learned during this deal make sure you record your land contracts right make sure your borrow is everything in hand um but servicing how are you servicing your note before we talked well within I got 20 plus years as a property manager so me servicing it is just using my standard uh real estate accounting software um you know without uh you know giving uh with a plug to any particular company there's three big ones out there and I use one of the three um so I I've been servicing them myself um the more and more I get into these I will be kicking them over to Services um and one of the services that you introduced me to um I like the way they operate so I might even start using them as well awesome it's amazing go ahead Nathan yeah so yeah no that's awesome yeah so when we talk about this stuff um what is the key things that you learn during this process we're gonna open up our question too so make sure you get your questions ready what did you learn through this process what things did you take away what things would you do differently in the future for future creation of notes well pretty much one I learned that y'all exist that's the first thing that was wow uh two um when I instead of doing my little you know property manager uh you know hey let me sit down and see if you're gonna be a good fit I will actually start uh to use a mortgage along the origination person so that I have the property disclosures so that I don't get caught up in the predatory lending um causes out there that they protect consumers um one of the things that I was already already aware of and most people are not aware of uh if the dodd-franked guidelines whereas if I'm doing something um you know and the person that's in the house is our own occupant I can't put a balloon on their product you know so therefore if I'm dealing with another investor or uh property manager or company then that's a business to business transaction but there are certain protections that you know you're not aware of God Frank will penalize you for if you do not um give certain guidelines so you can't do balloons and other little things um so that I was already aware of but once I start uh looking into the originations of the loans I'm like there's a couple other protections out there that uh usually lost that was something that I had to sit down with my attorney and be educated on and that's something else I learned from y'all um so uh yeah I mean that's basically one of the things I'll do different um one thing's too is you meant we we went over what was the one thing I pointed out about your notes and I said dude you got you can't do this anymore about some of the terms of your notes so let's say I was the Takeover a note at three percent I would sell that note to someone else for six percent I'm happy with the three percent return but there's not enough money for multiple people to be involved so what do you think about that you get a list of just seller fine Stokes they created at six percent without nobody trying to compete with a bank yes you're right banks are giving loans at six seven eight ten percent why are you doing it right what are you getting from it and I get Joe's point that he was making a three percent spread but you can't sell it you can't borrow against it so don't create those notes at six seven eight percent you've got to be above ten if you can create it there's also the ability to repay so you gotta make sure the borrower can pay the payment but get that loan up that bar may not be the right borrower for your asset so the ability to repay is part of that process of underwriting um we have nationwide rmlos that we can connect you with but yeah Joe no more five percent notes six percent you've never seen another five percent that one that we were doing was nine percent and that was a fluke was saying because normally are between uh six and eight percent and I actually went nine percent on that last one and you're like that's the bare minimum I want to see from you so I'm like yeah so so those people who are doing I want to see in the chat box and YouTube a lot what percentage are you averaging when you create that wrap note that position selling and if you use a different term let us know as well what rates are you selling your notes at I'm curious to see where that kind of that range is are you six to eight eight to ten PRI no no feelings hurt what were you doing beforehand and um while you tell us that in your comments I'll share a little bit about we have a great chart that we provide everyone to show what happens if you create notes of five or six and we want let's just go crazy 20 what kind of discount you're gonna expect if that note is lower because notes are not bought on upb we've done plenty of webinars on it it's based on that the term numbers what was the you know the length of the term what is the uh interest rate because those two driving factors Drive what you can sell the note remember that interest rates your annual return on the note for no buyers everything else is principal so I would encourage you guys to take a look at the chart um we I put in the link um a website that I have to kind of look at the FAQs our frequently asked questions and if you want to submit a note for us to look at to hypothecate to lend against you can put in there um with that said I'd like to awesome we've seen tens and twelves this is great right um remember um I know Ricky's in Lincoln said he's new so so Nathan what do you think about all this this is new for us yeah so Nathan what do you think I know this this is great stuff this is really good and just going to the the creation of your note and what kind of an interest rate the reason that the person is seller financing is because they can't get a loan from A bank so because they can't get a loan at a bank at seven or eight percent uh you have every right to charge more because you're offering a Specialized Service so they they can't qualify normally that's not to say they're not good borrowers they just don't fit the bank's box yeah um as a self-employed person it's hard for me to get a bank loan and and I make plenty of money but it but I'm self-employed and Banks don't like that and so it's it's hard for me to get that loan so it's it's it's those kind of people a lot of the time self-employed people that just need a loan they just don't fit the bank's box so I I really like this we looked at the numbers on this together with the hypothecation um to me it makes more sense than like for me to buy them it makes more sense than as a partial um just because I have to I'm always in the back of my mind I have to be thinking about okay at the end of my fund I have to liquidate and pay everybody back their Capital so there has to be something there that I can sell at the end some way that I can bump out uh in order to get that Capital back from the numbers yeah so partial kind of hurts because you don't get that principal number back um but I would tell you that um if you are looking to be passive reach out to us we can help you out with that um Capital cost is our biggest thresholds in our business so if you are looking for you know to get into deals with that reach out to us we can make things happen for you that um may work for your numbers so if you're tired of your five percent money and the banks are six percent CDs let us know um we're seeing 12s tens elevens which is great um so one of the questions we got was how do you avoid usually laws that are that go above temp how do we avoid usury laws it scares me to go above 10 each state has regulations and there's a federal government regulation of what it can be so yes or sometimes the usury law per stay is fixed but the federal government allows certain things so I would tell you to talk to your attorney local attorney to see what you can do and what you can't do in your state um so good question Gerald um and yes yes absolutely so Joe when we when we do these kind of things if someone's looking to do this what would you tell them about the process um what was overwhelming for you what was easy for you um what makes sense to you [Music] um well a lot of it nothing really was overwhelming some of it was new new learning um and then one of the things that it becomes when you do it properly it gets really really close to the feel of a standard closing so the original Arrangements um that you're working with with your uh the person that you're borrowing from the original the end borrower not me but the end borrower you might give them some leeways hey maybe they don't hit the 40 percent of the bank uh um we're saying that then yeah but uh you know with that being said there still has got to be some kind of guidelines that you know you're not loaning loaning or putting someone in these projects that's in a 75 DTI range so the same yeah you might do 50 or whatever but you gotta still be responsible for whatever you're doing um and the amount of legal paperwork that follows up there behind everything is very similar to a closing so um that's one of the things that was one of the biggest things sure absolutely yeah we did full and you know when we first started doing this one of the things we concerned with was we're asking for personal guarantees and Company guarantees how'd that make you feel were you nervous about that or are you like I'm gonna go be making 75 I'm not worried about that at all not worried about it at all because of the interest rate on what I'm gonna make potentially uh second not worried about it is because when I'm uh stepping into these subject two situations I'm basically when I'm telling the original seller is like look I'm gonna step in I might go out and find someone to sell this uh this sell my position to but if they default we're gonna come in and step in so that's one of the things that I say to people to make them consider subject to versus going to traditional route I mean that sell you know save all the realtor costs and all the closing attorneys and everything like that so A lot of times sometimes that's twenty thirty thousand dollars for people so it works as well yeah so it's amazing I'd like to see some questions in the air about the process and some of that because this made a lot of sense for us right for us no buyers we've taught a lot of these new creators out there for no buyers who are watching us understand the fact that I didn't get an 11 I didn't get a 12.

I'm North I'm double digits well double digits right um we got into the fact that we were hitting 15 plus return I I don't know anyone else doing that right now notes I mean as a performing note and the good thing about this for note buyers if this thing defaults right it takes me a lot to get to the point where I have to foreclose it's pretty much almost a lock solid that if it defaults I have Joe it was company and I have the asset to back me up on getting this deal done and fixed and we can limit how much we give them based on the percentage of upb buy your property this property we bought was 130 000 property we bought the uh we lent in 53 000.

right we're well in good position and if anything goes crazy we're well covered so would you make that deal giving 15 for that starvation now it's not you know it's not a note on a property but it's still an IOU we're still playing the bank process so if you run the numbers and you get into this um I'll probably be holding some stuff in September uh some webinars on more details but no buyers think about it from that perspective no creators this idea of what we're doing is awesome for you you're unlocking Equity right if you bought a note you're into the note for 50 Grand right the underlying debt and you sold for 150 Grand you can unlock that money we either do about 65 percent of property value you can unlock some of the equity so just a definite interest for you guys to do it if you own a property outright we can definitely get a spot where we can um not buy the no we can actually lend against it we can also buy it so um so tell us a little bit about what you're going to be doing in the future to increase this what are you doing in your business now that will help you do more business in this sector subject twos and wraps and what are you doing now to increase that flow in Virginia well basically um when I'm unlocking capital um and unlocking Equity that's been trapped it allows me to provide more of a service so I run on the solutions based company I like to go out stop foreclosures stop tax liens tax sales um basically where people are going through some kind of trauma and we I call it trauma because anytime you lose a family member you lose a job you lose a wife especially if you lose a wife um it creates an emotional trauma that takes a minute to recover and a lot of people will just bury their hands in the set in the same and when they do that it creates an opportunity for me to stabilize this situation and also pick up another asset interesting very cool amazing if we if I I don't see any questions in the feed um but I will what I will do is if additional questions for Joe you can reach out to them to the the link that we shared in the beginning um to get more questions if you have questions for us let us know um I think it's time Nathan what kind of uh well the question is and I'm very curious about this Joe yeah I'm really curious about this because the more or I think about it the more I see subject to purchasing being a really good option is are you seeing a rise in this in the last year or what do you see coming up on the horizon well especially with the interest rate being as high as they are on the traditional Market it makes going subject too because you're buying something that was originated 10 years ago so therefore I'm able to pick up a unit at three four five percent I even have one the other day I picked up it's 2.25 percent um and then I'll sit there and sell it to someone else at nine or ten percent and then I I test low on the monthly but now I can also cash more on the monthly and hypothecate a portion of that and unlock more Capital to do more deals so therefore that's why I don't care about the 15 number if I'm able to do three four deals for that 15 money yeah that's awesome no buyers beware right the traditional buying some banks that we've been doing forever may be shifting right if you want to keep it total chasing that four or five percent notes have fun um good luck uh you better really cheap Capital right we're in a different world now we got a shift um new creators we love you guys please reach out uh our website our podcasts our webinars um and also the DME coming up next year encourage you guys to communicate with us and ask us questions we know that a lot of the stuff is brand new right the information is interesting um so I encourage you guys just to ask us you know questions about what we do um what we're doing and something like that so uh Randall if I see your question regarding what's Joe Conde information um I'll put in the chat again um how to get in and stuff like that please make sure you uh spill it out and you'll get a quick email regarding uh what that what the email address is for them uh it's in the pin comment as well so um so uh yeah so Gerald I know that um the question was regarding I jumped in late um you're looking for an email regarding what is a hypothecation um I would encourage you guys to go to our web my website and create a FAQ and I would encourage you guys to go listen to um the previous webinar we had with Sean uh which was comparing what no Parcels was compared to um no Parcels compared to hypothecations they're very similar you're just selling me I'm just lending you money big fast based on a note and you continue to hold the note and get cash flow right um yeah so the biggest thing is hypothecation is just you are now using your node it's collateral to borrow money you're not using the property to borrow money right you're using the note to borrow money it's you are not selling a note which the note partial and selling note is selling the note you're changing hands for any period of time or a propagation that note does not transfer Sean our attorney did a great job describing the differences you're not selling that actual note you're selling you're just borrowing money and using those collateral and paying off that debt in five ten years so uh if you have assets I send you a link to go fill out let us know that Joe I really appreciate you jumping on and kind of being open to sharing some of the troubles you've had and issues and concerns you've had um and it's been it's been a joy to actually work with you the last you know month or so we've got to know each other pretty pretty well um I'd like to ask you what final words you have for the people out there who are either brand new to subject twos or brand who have a bunch of Stuffy twos and are curious about this strategy of unlocking well if you're brand new to subject who's learn the basics the laws regarding Jermaine act 1955 learn the rules before you do them because if you don't you're going to run into that do on sale closet is going to mess you up but if you uh you have existing ones that you've done then networking um these note buyers that's another exit strategy that you know is is a nice little way out um but it's also a nice way to unlock the capital that's trapped because a lot of us subject to people we make our money over time yeah absolutely awesome well Joe it was a it was a pleasure to have you on it was a pleasure to have you join us and share your knowledge experience I encourage everyone to reach out to Joe um he has some great things coming up as well uh I want to hopefully get uh you know Joe down to DME in uh in June so um May June I keep reading the date on it but my calendar well just put it on my calendar you know but it works it works yep yep so uh feel free take a look at that this will be recorded for those are asking um thank you so much for all the kind words I'm against um uh yeah as Cindy said this is the next generation of Newton Capital uh I totally agree um so we encourage you guys to reach out we will talk to everyone soon Joe hold on for after hours and uh talk soon thanks a lot everyone you needed money and so people get caught up in this interest rate which I completely understand but if I were to charge you 30 which we don't this deal worked for you because of what the upside and what you unlock what you can do with that money and what it's saved would I be accurate yeah the course so there's a couple of reasons why I will not care about an interest rate what do I care if it's 15 17 or even 30 percent if I'm making 75 on a deal I'm not gonna give away 15 16 20 because the deal but you use our money to go make 75 on our money [Music] hey everyone I'm Dave putz good afternoon everyone and alongside me Mr Nathan Turner how are you Nathan I'm doing well how about you good man it looks like you're not home relaxing or your desk where are you I am actually in Dallas Texas right now cooking it is so stinking hot yeah I'm here at a dental conference I'm out looking for investors oh we thought maybe you should get your teeth done Dental off Dental conference interesting well hopefully uh you become successful down there and convince these awesome people with a lot of money to do some work with you congrats man that's the plan yeah so it's been an interesting uh few months for those who are brand new to our live stream and our videos this will be recorded post on YouTube and our podcast in the last eight months you and I have done a lot of work with seller finance owner finance rap notes subject twos armalo world and I think one of the greatest things you said last our last webinar was that you're amazed how so many people who are not Originators are seller finance or creative Finance people does not know about note buyers yeah I I'm astounded and part of that I think comes from my background I started off as somebody creating notes as well um and my whole intent at that time was I started creating these notes and then my thought process immediately went to okay how do I cash out of these surely there's got to be a way like you can sell a rented property so surely you can sell a note I didn't even know it was called a note at the time but that's okay I figured there's got to be a way to cash out of these yeah and so I'm looking for note investors and so I I don't know I guess I assumed everybody was doing that but uh we've been surprised to find out how many how many of these no creators don't know that we're out there yeah and I think that it's either lack of Education lack of knowledge or just a different world right we are in a different world than mostly people out there that they just don't get what we do and we're trying to help that Community not only understand the exit strategy of selling that note that they created but also understand what's needed to sell it for the highest dollar right to make it a win-win for you as well as for us to make sense for both of us and I think that's a key element for everything to happen successfully to bridge this huge gap together um and then two things that we have coming up one is soon or the other for those people who are curious about the note investing space Nathan and I are hosts re-hosting our five-week advanced level training for note investing which include a calculator a non-performing calculator due diligence so if you're a note originator and curious what note buyers do that class is a key element um it's an advanced class so it does get rid of the basics and Nathan and I are running for five weeks um I highly encourage you guys to check that out and be part of that small group of investors one of the other ways these no Originators seller finance subject you people how else can they connect with us next May June well let me back up for the class first of all yeah it is an advanced class but uh anybody who's creating notes you qualify is Advanced if you've got a knowledge of how notes work because you've created them you definitely you're you're part of that advanced group uh so don't be intimidated by that because that's you're definitely part of that group on top of that though if you want to come and meet with Dave and I and a dozen other node investors or more many dozens several dozen uh people who are in notes people who are looking to buy notes um we've got an amazing conference the Diversified mortgage Expo I just took it over this last year ran our first one in Nashville in June this last year the next one is already being planned we're already making uh all kinds of plans for this we're scheduled to go back to the same hotel in Nashville uh next next year May 31st and June 1st uh so heads up tickets aren't even on sale yet but just heads up for that make sure you put it in your calendar so you don't want to miss it it's just it's the place to be to just network network we we did our survey at the end of conference and just you know one of the questions we asked was what's what's the most valuable thing that you took from this and like 90 of them all just said networking yeah so it is super important we've said this over and over again about this is a relationship business part of that is getting out and meeting people and talking with them want to have dinner together drinks together or whatever that's a big deal sure so yeah I encourage you highly we had some of the more advanced subject to people come to our conference or not mine Nathan's conference last year um and the names we had there I'm sure all of you guys either follow or took their trainings they joined us they're probably on the call right now uh the nick mark Monroe and you know Brian Carlson all those people out there Dan Diaz who are great leaders in that space came and said oh my God I gotta have my people come next year to us it's a great wealth of information so I would encourage you to do both get into the advanced class we're starting September 5th um take a look at that uh if you need information it's on our website or on my website jkpholdings.com slash Advanced note investing or just show us an email we'll get to you and then the DME is also there which we can connect you to so feel free to reach out Branch together connect with us and let's make some money together right so one of the things we've come across yes we have videos available of last year which are great yeah they're good quality the sound is great you're gonna be able to follow up very very well uh and get some great education that way uh it's a really inexpensive way to get kind of caught up to speed which is networking so make sure you sign up for this we are live on Facebook LinkedIn I think Instagram Twitter so right now I'm putting the Chats on to um those platforms if you missed it let us know but you can definitely check out all those information so we want to make sure that you guys all get what we're doing here right this whole Space of note investing is a huge thing for all of us but what we don't realize that it is also available for those people who may not want to sell their note what they may want to do is hold a note and we've talked about wrap notes being a little hard to sell because you have an underlying buyer a borrower that you're you have a connection with and things like that so we want to make sure that we solve that problem for those people who have originated and know that either took over existing borrowers asset subject to then sold that property to what we call a Rob buyer so it's a wrap note and they sold to them that system is great we just want to make sure that if we go ahead and bought that new we want to avoid the complexities of that purchase so one of our ways of doing that is we can buy the whole note and work out the power of attorney and stuff like that which we have webinars previously about that or we can actually give you money for a period of time and lend you the money so what we do is we instead of giving you the money you give us no you keep the note and you use the notice collateral and use our money to do whatever you want to do with it we would tell you that we would first want you to pay off that underlying lien we know it's three percent we know that frustration but we will we have other videos why it makes it simpler for us but we can work out the details if you have a situation that's specific for you given that this idea which we did a video on Note Parcels versus hypothecations a while back is what we call hypothecation which means you're borrowing money using the note as collateral the note never changes hands and we just create a brand new note right this concept's been around for a while we just never heard anyone really use it well guess what we're using it so we did put our tip toes in the water and we tested this out and what you may find out is really interesting because it became a win-win for both sides the unlocked Equity be able to save a property and we got a return that would make sense for us so let me uh switch out here Nathan anyone talk before we bring our guest of honor on now I'm really excited about this I haven't tried this yet I'm really interested interested in it uh you and I have gone over some numbers on it it makes sense even when I'm borrowing money to do this so yeah I'm I'm still learning this too so I'm I'm excited to have her guest on yeah so I'm gonna bring it in right now I realized that we uh we're gonna bring him on here now he just got introduced to us a few weeks ago um so I oh I do have to change his name real quick but Joe welcome to the programming man I appreciate you jumping on with us this Friday afternoon uh while I uh get your situation fixed out here I hope all is well with you what's new with human man not much man how y'all doing what's up I don't know about this guest of honor thing because you know I've been in this world for a good little minute but like you said I'm one of those guys that even though y'all existed and I've been doing these years wrapping those for a long time I you even have to tell me what rapnote was because that was that blew my mind as well so I was saying just networking is key to everything so we're saying I'm honored to be here with y'all that's awesome well it's it's been an awesome pleasure for us to really interact with you and talk with you um so Joe tell us your background where did you get Starwood real estate how did you get introduced to real estate in the beginning I started out like uh just like any regular home buyer was uh bought my house and then the house next door went up the sale bought it turned into a landlord and then from a landlord bought another house refinance where's wash repeat and I'm staying now I have a small portfolio then I started to get into investing but I'm uh with a property manager I've been doing this for about 20 20.

we're gonna say 20 years because I'm not gonna show Too Much gray so that's awesome that's awesome uh landlord's good I'd rather be the bank or rather service was saying landlords um are good until I found out there was a better way by just you know investing in an outside and originating the notes yeah so absolutely being being the bank is what we're all about right Banks don't own reos and properties and have that kind of um liability we're not saying it's bad we're just saying we have an awkward way of doing this right and Joe it was funny because when we first started talking I said well do you own a rap note and you said no and we said well did you use 72 yes did you sell it and you said yes this is we could call that a rap new what'd you call it for all this time you've been doing it uh selling my position okay I'm still in my position so right so it it's funny you say that because you know we all have different words for different things and it whoever you teach may just change it just a tad right so what we learned about wrap nodes and subject twos is that they're very intricacy at build that kind of platform right to know what goes into it is you have to be very educated on how to create that subject choose and what you need to make sure that's a legal document would that be accurate yeah definitely okay it's amazing right because there's mortgages Data Trust in Texas right in certain States and there's land contracts what have you mostly created when you sold your position right what are you mostly created for your security instrument when you sold that asset not until 10 I'm creating a land contract an agreement for deed um there's no underlining mortgage then you know I can create a bit of trust off that but yeah I got to get a mortgage origination person for that but me personally land contracts that's what I specialize in gotcha and this is in in Texas Joe no I'm in Virginia okay okay yeah so being in Virginia you know land contracts for those who don't know we call them kanji for Deeds sometimes they're called lease options they're a little different but same kind of concept right this idea of you selling your security and if the borrower has to pay off the entire debt before getting the deed or a mortgage you get the deed up front right kind of like a you do like a car kind of purchase where you the the title of the car is held until the whole loans paid off so tell us a little bit more about how you got introduced to subject choose how did you learn about them did you have a mentor how did you learn about them um well no naturally uh with as far as the initial learning about them it started you know back at the I mean gosh we're talking years and years ago but uh you know Rich Dad education YouTube University you know just hearing about these different things and I didn't believe it you know that you could sit there and get a property like that so I everything that I heard on the internet I went and paid an attorney to research it make sure it was legal and you know when I to my surprise found out it was I mean granted attorneys are not your friends they're not going to do it for free so I learned things at two or three hundred dollars an hour but you know after about 20 hours of Education from an attorney it pretty much I created documents just like the attorney would have created it and I learned the legal side of it before I learned the investing time of it gotcha awesome so we we have a bunch of awesome questions for you um we're gonna put you on the spot Joe's been a successful property manager and real estate investor we're gonna premise with that right he's done plenty plenty of deals however there's things that we've come across that we've learned and we all learn ongoing I'm not discreeting Joe we just finding that a lot of people who are reaching these notes don't know the legality of that because be honest with you most people expect their note to perform forever so that the default is typically not discussed it's more about forming it creating it find the borrower get them on you know paper and get a down payment as Joe's realized in the the month and a half two months we've been talking is that it's not the 100 right way of doing it right um so tell us what you did before we met how did you approve a borrower to buy one of your substitute assets prior to interacting and watching our videos well basically I I went from my landlord background with it so I would you know look at their paycheck stubs or I would look at their bank account bank account and see that they have a positive cash flow could they keep a positive cash flow um along with keeping that positive cash flow could you keep it for multiple months now after you keep the positive cash flow in your account are you able to come up with a upfront payment um I was not aware that what I was doing was skirting and getting real close to what the bank should do and I I should be acting more like a bank and having certain disclosures and stuff but after I saw them keeping cash in their account then I would put them on a 12-month trial payment period if they were able to hold that payment and not default uh payments to do on the first and if I receive it on the first after 12 months then I would have regenerate the contract for deed so that's kind of how I went into about it learning from you know different different you know mainly from y'all and then talking to other attorneys okay I needed to be a little bit more with the origination process and getting the proper disclosures out there yeah so okay it's pretty good yeah YouTube University and lawyers so we want to back up for a second uh Cindy Coleman who's a regular uh attendee asks why were you doing land contracts and not mortgages uh because I wasn't comfortable giving the deed away to anyone until you can prove that you can perform it and when you said that which one of the things you mentioned to me which is really awesome before you create this land contract what do you do with that bar in your own kind of check to make sure they're able to pay for any length of period at all yeah I took that 12 month Chopper so the 12-month rental is a good test to see hey can you make payments regularly so you're seasoning a note before you even create the note correct which is awesome I think it's I didn't know that I didn't know about the season in terms that was something else that I learned as well that's awesome so yes the legal side is what we focus on for those who don't know Nathan on background we've been buying notes for over a decade right um and we started out with a non-performing notes which was a crisis after those 607 debacle so we didn't legal side more than performing side which is just different um so when you got introduced to us we didn't use the word hypothecation what would you call yes uh most mentioned uh lease option owner finance yeah we're owner financing seller financing these notes and the security instrument you create a note which the promissory note to pay and security instrument that goes to County which either mortgage do you trust contract for deed we prefer mortgages but we can do either one when you create this idea and we offer to you to not buy this note but to give you money and you continue to own the note why was that attractive to you well mainly because you're only you know Contracting for a portion of pair of of like a five-year period a 10-year period or whatever I might note that I'm originating is a 30-year note so it's like I can borrow against it and then still collect on the other ears that I didn't you know was saying leverage my position on so it was a it was a really really like a win-win for everybody and but in addition to that the fact that we're able to do that and the D doesn't have to transfer everything it's just though everything they were leaning against is the note itself uh so that was just like a you know like a just a light bulb click on it's like wow all right this is cool gotcha a question from the audience uh from Kendrick is are you using trusts for your subject to wrap notes now yes everything is always done in a trust uh mainly because the trust the name of the trust is what the public sees but the terms of the trust it requires a court order to open it up and I would encourage you guys Joe knows a lot about trust he's had a lot of experience handling the beneficiary part and all stuff um I presume he's going to be coming out with some kind of education soon to teach those people who have been doing it who are watching um in our in the uh posted uh comment there's a way to get his information I'd reach out to him and see what kind of uh education he has regarding how to structure that trust correctly so that you don't get yourself in spot that you kind of get caught up in so that's awesome um or a mortgage when you're lending to you yeah no is the collateral is that the cfd or is that a mortgage that you're like yeah we're actually leaning against a contract for deed right now a land contract right and that we're able to get the borrower right to be the lender so it's a little bit different than I'm used to I'm out of my comfort zone right now right so we literally hypothecate against land contracts indeed yeah who knew right yeah that's cool who I'm watching I'm not a big land contract person but it really worked in this case um and we're gonna share some of the numbers in a few minutes but what did why did you want to hold this note versus sell it to me mainly because my notes for 30 years if I'm selling it then I'm totally taking my hands off of it see I put the person into the agreement I backed the person so therefore if they default or anything like that I can always step right back in and pick up where they left off so that's one of the reasons why I would rather sell a portion of time to sell the whole thing totally in addition to that me backing the per the uh the borrower that I originated note it just makes the situation stronger you got two people guaranteeing this payment versus one yeah that's awesome and when the hypothecation we're really going with the idea that if Joe defaults to us which we're now the lender he's a borrower we have that that collateral which that contract for deed as additional security but we also have his company and him personally signed in this agreement but like many 32 people they are not going to default on us right they're in most cases have a really low subject two three four percent debt and they don't want to ever let that go so they'll make sure to make our payments so they don't lose this cheap debt out there so it's really cool um so what are you unlocking when you are able to borrow money you we're talked about what you can unlock why did this deal work for you and what other ways can you see borrow against your position right your rap no what can this do what can this unlock for you it unlocks track Capital because when I originate these rap notes I'm there's equity in there there's uh there's profit monthly in there but it's it's coming over time so in the big picture when you look at everything up on whiteboard or you look at it on a spreadsheet there's tons of profit in the deal but I might only be getting a thousand dollars a month might only get 700 a month it might be 100K in it but I can't touch that on your camera so therefore if I can hypothecate which is a whole new word that I even have to look that one up wow um if I can apothecate a portion of it hey now I got Capital now I can do go out and do other deals and you know make other moves yeah you unlock Equity they were stuck because you did what you did share a little bit about what did you get what was this deal without getting too much of the leads why this deal win for you what was about that you need to get done I know some people are going to lose them here right but what did this deal do for you in your situation what were you stuck what problem did we solve for you well pretty much I had a contract obligation on another transaction that I had done a bridge uh loan against multiple properties um I wasn't um none of these properties were supposed to cash out in any time in the new future and one of the uh people that I originated the raptner with they sold it to one of their family members their family members did not understand the rap know the situation or what it is where you've got it so they defaulted to the original go-to let me go get a bank loan and pay this off so when they did that it came out of the arrangement five to seven years early and it basically created a situation where if I didn't find out a different way out there was gonna be a lot of consequences wow so then I you know brand across y'all and one of the investment groups I'm connected to yeah I was like this sounds too good to be true we're gonna talk to these guys and I'm gonna go far-fetched here you needed money and people get caught up in this interest rate which I completely understand but if I were to charge you 30 which we don't this deal worked for you because of what the upside and what you unlock what you can do with that money and what it saved would I be accurate yes a cool course so there's a couple reasons why I will not care about answers or anything now granted if we jump higher than 15 I'm looking for ways to get out of it quickly because now I'm feeling more like it's a hard money loan it's a you know High investment loan I got to be out of it six months to a year but what do I care if it's 15 17 or even 30 if I'm making 75 on a deal so that works it works right we can charge 74 and you still make one percent right obviously you're not doing that so we can literally sit there and charge because people incredible I'm not going to give away 15 16 percent 20 because the deal but you used our money to go make 75 on our money exactly all day long that works twice on Sunday right exactly it's just amazing that we I'm glad we can get talked about um what is more important to you getting the most money or the lowest payment on a five-year or ten year deal granted let you guys all know we're doing these on either five or ten year we don't go too much farther but on a five-year deal what is more important to you most of the time the most cash out or the lowest payment because if we do the max cash it may be above your current p i that you're receiving from your your position rap no borrower exactly so in the five-year Mark uh the most cash is what I'm looking for because I'm gonna take the the cash I'm unlocking and go out and do two three more deals and therefore I'm gonna absorb the high interest rate for the the the five-year part now once we go out to ten years and even if we were to get into channel 15 now I'm looking for more of a payment because now I'm structuring the deal around long term where we're both making profit yeah down the road so it all depends on the time the term yeah yeah so one of the things too you didn't realize before we did this deal and one last stress is Servicing you know okay you create a note you record the note which is one thing we learned during this deal make sure you record your land contracts right make sure your borrow is everything in hand um but servicing how are you servicing your note before we talked well within I got 20 plus years as a property manager so me servicing it is just using my standard uh real estate accounting software um you know without uh you know giving uh with a plug to any particular company there's three big ones out there and I use one of the three um so I I've been servicing them myself um the more and more I get into these I will be kicking them over to Services um and one of the services that you introduced me to um I like the way they operate so I might even start using them as well awesome it's amazing go ahead Nathan yeah so yeah no that's awesome yeah so when we talk about this stuff um what is the key things that you learn during this process we're gonna open up our question too so make sure you get your questions ready what did you learn through this process what things did you take away what things would you do differently in the future for future creation of notes well pretty much one I learned that y'all exist that's the first thing that was wow uh two um when I instead of doing my little you know property manager uh you know hey let me sit down and see if you're gonna be a good fit I will actually start uh to use a mortgage along the origination person so that I have the property disclosures so that I don't get caught up in the predatory lending um causes out there that they protect consumers um one of the things that I was already already aware of and most people are not aware of uh if the dodd-franked guidelines whereas if I'm doing something um you know and the person that's in the house is our own occupant I can't put a balloon on their product you know so therefore if I'm dealing with another investor or uh property manager or company then that's a business to business transaction but there are certain protections that you know you're not aware of God Frank will penalize you for if you do not um give certain guidelines so you can't do balloons and other little things um so that I was already aware of but once I start uh looking into the originations of the loans I'm like there's a couple other protections out there that uh usually lost that was something that I had to sit down with my attorney and be educated on and that's something else I learned from y'all um so uh yeah I mean that's basically one of the things I'll do different um one thing's too is you meant we we went over what was the one thing I pointed out about your notes and I said dude you got you can't do this anymore about some of the terms of your notes so let's say I was the Takeover a note at three percent I would sell that note to someone else for six percent I'm happy with the three percent return but there's not enough money for multiple people to be involved so what do you think about that you get a list of just seller fine Stokes they created at six percent without nobody trying to compete with a bank yes you're right banks are giving loans at six seven eight ten percent why are you doing it right what are you getting from it and I get Joe's point that he was making a three percent spread but you can't sell it you can't borrow against it so don't create those notes at six seven eight percent you've got to be above ten if you can create it there's also the ability to repay so you gotta make sure the borrower can pay the payment but get that loan up that bar may not be the right borrower for your asset so the ability to repay is part of that process of underwriting um we have nationwide rmlos that we can connect you with but yeah Joe no more five percent notes six percent you've never seen another five percent that one that we were doing was nine percent and that was a fluke was saying because....